BY P. ARUNA

SP Setia Bhd said the impact of the fluctuation of the pound on its Battersea project(pic) would be confined to an accounting effect. This, it said, was because the profits would remain invested in the project for the longer term.

PETALING JAYA: Two Malaysian developers with exposure to the UK have assured that their investments there will not be adversely hit by the fluctuation of the British pound due to the Brexit vote.

SP Setia Bhd said the impact of the fluctuation of the pound on its Battersea project would be confined to an accounting effect.

This, it said, was because the profits would remain invested in the project for the longer term.

To date, the property developer said it had sold about 85% of the total 1,661 units launched for the three phases of Battersea.

Phase 1 of the project is scheduled to be completed and delivered on a staggered basis starting from the fourth quarter of financial year 2016 (FY16) until the second quarter of FY17.

The group expects to recognise part of the profit from phase 1 in FY16.

“While the profit from phase 1 will be recognised, it will also be reinvested in the development of phase 2 and phase 3, which are expected to be completed in 2020.

“As such, the fluctuation in the pound would be confined to an accounting effect as profit will remain invested in the project for the longer term,” it said in an announcement to Bursa Malaysia yesterday.

The other consortium partners for the 39-acre project are the Employees Provident Fund (20%) and the Sime Darby Group (40%).

“Amidst the short-term uncertainty in the aftermath of Brexit, we are still positive on the long-term prospects of Battersea and remain committed to the development of the entire project, which is expected to be fully developed by 2025,” it added.

Eastern & Oriental Bhd (E&O) said the UK’s referendum to leave the European Union, or Brexit, would not have any negative impact on the total net realisable value of its properties there.

The group told the stock exchange that it had invested in London much earlier before property prices there rose sharply and the ringgit-to-pound average exchange rate was lower than its current level.

E&O ventured into the UK in 2012 when it acquired Princes House in central London with an estimated gross development value of £60mil – which is slated for completion this year.

It said that its bank borrowings were conservative with a low loan-to-value ratio.

“Our properties are located in prime locations that remain very much in demand with positive sales prospects.

“Brexit would not have any negative impact on the total net realisable value (total value of properties less total bank borrowings) of our properties in the UK,” it said.

RHB Research had said Brexit could result in downside risks to SP Setia, as foreign and local buyers would likely hold back their purchases, as they ‘wait and see’ how the developments would affect UK property prices.

It said the uncertainty arising from Brexit could also see E&O’s launches being delayed, resulting in the company’s land holding cost being higher.

The pound has fallen about 8.6% against the ringgit following the Brexit vote last Friday.